30 Questions
What does Supply Chain Management (SCM) focus on?
Improving the long-term performance of individual companies and the entire supply chain
How does logistics differ from SCM based on the text?
Logistics activities occur only within a single organization.
What is a key requirement for effective supply chain management according to the text?
Simultaneous enhancements in customer service levels and internal operating efficiencies
Which activities are included in Supply Chain Management besides traditional logistics?
Marketing, new product development, and finance
What do supply chains refer to?
Networks of companies coordinating actions to deliver products
What is the primary goal of coordination within a supply chain as per the text?
Achieving the best mix of responsiveness and efficiency
What is the main function of cross-docking in the supply chain?
To combine smaller lots of different products
What is the purpose of cycle inventory in the supply chain?
To satisfy demand between product purchases
Why is safety inventory held in the supply chain?
As a buffer against uncertainty
Which type of inventory would not be needed if demand forecasting was perfect?
Safety inventory
What is one of the three basic decisions regarding inventory creation and holding discussed in the text?
Supply chain optimization
In the context of supply chain inventory, what does 'work in progress' refer to?
Products in the process of being manufactured but not yet completed
Which approach to manufacturing focuses on performing a select group of operations such as only making certain parts or only doing assembly?
Functional focus
What is the main disadvantage of a product focus approach to manufacturing?
Develops expertise about a given set of products at the expense of expertise about any particular function
What approach to warehousing stores all of a given type of product together?
Stock keeping unit (SKU)
What is the main advantage of a functional approach to manufacturing?
Develops expertise about particular functions instead of expertise in a given product
What approach to warehousing stores all the different products related to the needs of a certain type of customer or a particular job together?
Job lot storage
What is the key decision companies need to make regarding their manufacturing approach?
Whether to use a product focus or functional focus approach
What is the main reason for holding additional inventory according to the text?
To meet sudden increases in customer demand
What is the trade-off mentioned in the text when deciding on inventory levels?
The cost of carrying extra inventory versus the cost of lost sales
What is the purpose of 'seasonal inventory' according to the text?
To build up inventory in anticipation of predictable increases in demand
What is the key trade-off mentioned in the text when making location decisions?
The desire for efficiency versus the desire for responsiveness
What is the definition of efficiency in the supply chain?
The ability to minimize waste in terms of raw materials, labor, and cost
What is the definition of responsiveness in the supply chain according to the text?
A firm's ability to satisfy the customer's expectations in a timely manner
What is the primary purpose of Inventory in a supply chain?
To move raw materials and finished goods between facilities
Which of the following is NOT a mode of transportation mentioned in the text?
Automobiles
What are the two primary purposes of information in a supply chain?
Coordinating daily activities and forecasting future demand
Which of the following activities is NOT related to coordinating daily activities using information in a supply chain?
Anticipating future demands
What is the purpose of tactical forecasts in a supply chain?
To guide the setting of monthly and quarterly production schedules
Which business structure was common during the industrial age for successful companies?
Vertical integration across the supply chain
Study Notes
Definition of Supply Chain Management (SCM)
- SCM is the systemic, strategic coordination of business functions across a company and its supply chain to improve long-term performance.
- SCM involves the coordination of production, inventory, location, and transportation to achieve a mix of responsiveness and efficiency for the market being served.
Difference between Logistics and SCM
- Logistics refers to activities within a single organization.
- SCM includes activities such as marketing, new product development, finance, and customer service, in addition to logistics.
- Effective SCM requires simultaneous improvements in customer service levels and internal operating efficiencies.
How the Supply Chain Works - Production
- Cross-docking: a process where products are not warehoused, but instead, trucks from suppliers unload large quantities of products, which are then broken down into smaller lots and recombined according to daily needs.
How the Supply Chain Works - Inventory
- Inventory is spread throughout the supply chain, including raw materials, work-in-progress, and finished goods.
- Three basic decisions regarding inventory:
- Cycle inventory: the amount needed to satisfy demand between purchases.
- Safety inventory: a buffer against uncertainty.
- Seasonal inventory: built up in anticipation of predictable demand increases.
How the Supply Chain Works - Production
- Factory approaches: product focus (performing a range of operations for a product line) or functional focus (performing a few operations).
How the Supply Chain Works - Production
- Warehousing approaches:
- Stock Keeping Unit (SKU): storing all of a given type of product together.
- Job lot storage: storing products related to a particular customer or job together.
How the Supply Chain Works - Location
- Location decisions involve the geographical sitting of supply chain facilities and the allocation of activities to each facility.
- The responsiveness vs. efficiency trade-off: centralizing activities for economies of scale or decentralizing for customer proximity.
How the Supply Chain Works - Transportation
- Modes of transportation: ship, rail, pipelines, trucks, airplanes, and electronic transportation.
How the Supply Chain Works - Information
- Information is used for coordinating daily activities and forecasting and planning.
- Coordinating daily activities involves using data to decide on production schedules, inventory levels, transportation routes, and stocking locations.
- Forecasting and planning involves using data to anticipate and meet future demands.
Learn about the definition of Supply Chain Management, which involves coordinating traditional business functions and tactics across companies to improve performance. Explore the key concepts and strategies in SCM.
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